Disney Telling Advertisers of Live ABC App in Mobile Push

By Christopher Palmeri and Andy Fixmer -
May 9, 2013

Walt Disney Co. (DIS)’s ABC network, staking
a claim to growth in online video ads, will brief advertisers
next week on a service providing live shows on mobile phones and
tablets, people with knowledge of the plan said.

Watch ABC, a first-of-its-kind application from a
broadcaster, will stream live and archived shows to pay-TV
subscribers, said the people, who sought anonymity because the
plans aren’t public. It could be released near the new TV season
in September, they said.

With online video ad sales growing faster than network TV
revenue, Disney and other programmers such as News Corp.’s Fox
are developing ways to let audiences watch away from home on
smartphones and products such as Apple Inc.’s iPad. The move
pits entertainment companies against Google Inc. (GOOG)’s YouTube and
Facebook Inc. (FB) for an ad market that Morgan Stanley (MS) predicts will
grow 18 percent to $2.73 billion this year.

“While the audience online is still small, it’s growing
fast and represents one of the biggest opportunities for the
media companies,” Ben Swinburne, a Morgan Stanley analyst in
New York, said in an interview.

As with Watch ESPN, the mobile TV service offered by
Burbank, California-based Disney’s sports channel, Watch ABC
represents a potential new revenue source. The network will
outline the product to advertisers in New York next week during
upfront sales presentations for the September 2013 TV season.

‘Already Talking’

“We’re already talking as it relates to ABC and the
upfronts of selling packages to advertisers that go across all
media,” Disney Chief Executive Officer Robert Iger said May 7
on a conference call.

Broadcast networks will receive about $9.18 billion in
advance ad commitments, a 1.2 percent increase from a year ago,
Swinburne wrote in an April 25 report. Cable programmers will
get $10.7 billion, a 6 percent gain, he wrote.

All four major broadcast networks offer some programming on
computers, tablets and smartphones. Later this year, Fox plans
to release Fox Now, an app giving pay-TV viewers expanded on-demand access to recent shows. News Corp. is releasing similar
apps for F/X, Fox Sports and NatGeo, said Mike Hopkins,
president of distribution for Fox Networks Group.

Live streaming will come later, he said in an interview.

CBS Approach

CBS Corp. (CBS)’s TV network and Comcast Corp.’s NBC have
released ad-supported apps that don’t require viewers to have a
pay-TV subscription, like an earlier version of ABC’s product.
The apps offer access to some archived programs.

CBS last month acquired a stake in Syncbak, a company that
works with local stations to stream their shows online.

Such services could head off the challenge posed by Aereo
Inc., which captures broadcasters’ over-the-air signals and
retransmits them to subscribers on tablets and smartphones.

ABC’s step marks the biggest effort yet by a broadcaster to
capture the nation’s 101 million pay-TV subscribers while
they’re away from the living-room set and more apt to be posting
on Facebook or watching a YouTube video.

“Much of the YouTube inventory is not attractive for
traditional brand advertising,” he wrote.

Local News

With the Watch ABC app, a cable subscriber will be able to
view programs on the road or in a room where there’s no TV, as
long as there’s a Web connection. The service can provide
travelers access to their local ABC station from anywhere.

By limiting the service to pay TV customers, it puts mobile
access behind a paywall and protects the fees that the network’s
eight owned stations and many affiliate broadcasters collect
from services like Comcast Corp. (CMCSA) and DirecTV. (DTV)

“They’re creating something viewers want and creating a
new revenue stream,” said Jay Baum, executive vice president
and director of national broadcast buying for the advertising
company Deutsch, whose clients include DirecTV and PNC Bank.

Last June, Disney released Watch Disney Channel, which lets
pay TV viewers with a mobile device see a live feed of the cable
network and archived shows. Disney Channel applications,
including ones for Disney XD and Disney Junior, have been
downloaded more than 13 million times, according to the company.
The existing ABC Player, introduced in 2010, has been downloaded
about 10 million times. Unlike the new product, it doesn’t offer
live TV or as extensive library access.

Online Ratings

One challenge facing all of the programmers, cable and
broadcast, is measuring online audiences and demonstrating to
marketers that they are reaching the viewers they expect.

Currently the ratings distributor Nielsen only counts
online audiences for a show when it’s seen within three days of
its original airdate and only when the commercials are the same.

That excludes later viewing on digital video recorders, on
a TV network’s website or on Hulu.com, the ad-supported site
owned by Disney, News Corp. (NWSA) and Comcast’s NBC Universal.

In next week’s meetings with advertisers, Disney will
outline plans to use Nielsen’s online campaign ratings, a system
for counting Internet audiences, Swinburne said.

“The key is to get a measurement system in place that
allows us to monetize, because I’m convinced there’s a lot of
consumption going on there,” Iger said on the call.